Apartment market conditions improved for the seventh consecutive quarter, but the pace has slowed some, according to data released Oct. 31 from the National Multi Housing Council (NMHC).
NMHC's quarterly survey of CEO's and senior executives of apartment related firms nationwide regarding apartment market conditions noted that while the multifamily sector is benefiting from high occupancies and increased rental rates, recently that growth has come at a more moderate pace. The number of respondents who reported tighter rental markets than the previous quarter declined to 25 percent, reflecting a slowing of occupancy growth and rent increases. In the previous quarter, 55 percent reported tighter market conditions.
Fourteen percent of respondents to the most recent survey reported looser markets, while 62 percent said the market was unchanged from the previous quarter.
"Even after nearly three years of recovery, apartment markets around the country remain strong as more report tightening conditions than not," said NMHC Chief Economist Mark Obrinsky.
Stock returns from apartment REITs are indicative of that slowdown. Through Nov. 1, the apartment sector had total returns of 6.84 percent for the year, according to FTSE NAREIT U.S. REIT Index data. The FTSE NAREIT All REIT Total Returns Index was up 17.37 percent during the same period.
Despite the slowdown, supply-demand dynamics remain favorable for apartment owners, according to the NMHC.
"The increase in prospective apartment residents continues to outpace the pickup in new apartments completed," Obrinsky said. Obrinsky added that obtaining financing remains challenging for apartment companies.
"While development activity has picked up considerably since the trough, finance for both acquisition and construction remains constrained, flowing mainly to the best properties in the top markets," he said. The bulk of the survey participants, 73 percent, reported that financing for new construction is only available for top-tier markets or properties.